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The Global Cleantech
GEF.org
Innovation Index 2017
Global Cleantech Innovation Programme
(GCIP) Country Innovation Profiles
CATALYSING INNOVATION AND ENTREPRENEURSHIP IN CLEANTECH START-UPS
AND SMEs OF EMERGING ECONOMIES TO PROTECT THE GLOBAL COMMONS
ACKNOWLEDGEMENTS
Lead author
Chris Sworder, Analyst, CTG
Contributing authors
Louisiana Salge, Junior Analyst, CTG
Henri Van Soest, Junior Analyst, CTG
In-Country Experts and Reviewers
Armenia: Frunzik Voskanyan
India: Reshmi Vasudevan, Sandeep Tandon
Malaysia: Muhammad Hasif Hasan, Mohamad Noowawi Md Yasin,
Azlan Yaacob
Morocco: Omar Agodim
Pakistan: Muhammad Hammad Bashir Saeed, Shahina Waheed
South Africa: Reuben Kadalie, Gerswynn Mckuur
Thailand: Jutamanee Martchamadol
Turkey: Osman Malik Atanur
Project Team
Richard Youngman, CEO, CTG
Todd Allmendinger, Head of Research, CTG
Stefan Henningsson, Senior Adviser Climate, Energy & Innovation, WWF Sweden
UNIDO GCIP Project Team
Project Managers: Mark Draek, Marco Matteini, Alois P. Mhlanga,
Takeshi Nagasawa, James New, Sanjaya Shrestha, Jossy Thomas
Project Coordination: Sunyoung Suh
Cover photo: © Chombosan / iStock
Background Photo: © Global Warming Images / WWF
Cleantech WWF
Group WWF is one of the world’s largest
and most experienced independent
Founded in 2002, the mission of Cleantech
conservation organizations, with over 5 million
Group (CTG) is to accelerate sustainable
supporters and a global network active in
innovation.
more than 100 countries. WWF’s mission
Our custom research, subscriptions, events is to stop the degradation of the planet’s
and programs are all designed to help natural environment and to build a future in
corporates, investors, and all players in the which humans live in harmony with nature,
innovation ecosystem discover and connect by conserving the world’s biological diversity,
with the key companies, trends, and people ensuring that the use of renewable natural
in the market. Our coverage is global, spans resources is sustainable, and promoting
the entire clean technology theme and is the reduction of pollution and wasteful
relevant to the future of all industries. consumption. The Climate and Energy
The company is headquartered in San Practice (CEP) works towards an equitable
Francisco, with a growing international and just transition that limits warming to 1.5°C
presence in London. Learn more at degrees, protects people and biodiversity and
cleantech.com. Our parent company, builds a climate resilient future. A future with
Enovation Partners, one of Consulting universal energy access by 2030, doubled
Magazine’s 7 to Watch, is based in Chicago energy efficiency, and a sustainable and fossil
(learn more at enovationpartners.com). fuel free energy system. The core team is
based in Berlin, Germany.
www.cleantech.com
www.panda.org/climateandenergy
Cleantech Group and WWF
WITH SUPPORT FROM
UNIDO Global Environment Facility
UNIDO is the specialized agency of the United The Global Environment Facility (GEF) is a
Nations that promotes industrial development catalyst for action on the environment, and
for poverty reduction, inclusive globalization, and through its strategic investments the GEF works
environmental sustainability. With the unique with partners to tackle the planet’s biggest
mandate to promote and accelerate inclusive environmental issues. GEF funding helps reduce
and sustainable industrial development (ISID) in poverty, strengthen governance and achieve
developing countries and economies in transition, greater equality between women and men. As
UNIDO contributes to the three pillars of sustainable such, GEF occupies a unique space in the global
development, as recognized by the recently partnership for a more sustainable planet. The
adopted 2030 Agenda for Sustainable Development GEF aims to expand private sector investment and
and the related Sustainable Development Goals commitment to environmental solutions across
(SDGs), and in particular SDG-9 which calls to GEF’s focal areas and initiatives, and to identify
“Build resilient infrastructure, promote inclusive potential opportunities to enhance private sector
and sustainable industrialization and foster engagement.
innovation”. Within this context UNIDO supports
the transition to a sustainable energy path as a
key solution to a climate resilient and economically
sustainable growth. UNIDO also accords high
priority to technology transfer and capacity
building of industries including small and medium
sized enterprises, and supports projects and
programmes that leverage the power of innovation
and entrepreneurship to address the energy,
environmental and economic challenges of today
by empowering emerging cleantech start-ups and
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bolstering the local entrepreneurial ecosystem and NV T
policy frameworks.
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Disclaimer
This document has been produced without formal United Nations editing. The
designations employed and the presentation of the material in this document do not
imply the express ion of any opinion whatsoever on the part of the Secretariat of the
United Nations Industrial Development Organization (UNIDO) concerning the legal status
of any country, territory, city or area or of its authorities, or concerning the delimitation
of its frontiers or boundaries, or its economic system or degree of development.
Designations such as “developed”, “industrialized” and “developing” are intended for
statistical convenience and do not necessarily express a judgment about the stage
reached by a particular country or area in the development process. Mention of firm
names or commercial products does not constitute an endorsement by UNIDO.
The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 3
Cleantech Group and WWF
EXECUTIVE SUMMARY
This report investigates the 8 partner countries of the Global Cleantech Innovation
Programme (GCIP). The GCIP is an initiative of UNIDO and the Global Environment
Facility conducted Armenia, India, Malaysia, Morocco, Pakistan, South
Africa, Thailand and Turkey. The GCIP aims to foster innovation and
entrepreneurship ecosystems, and to catalyze investment to support and accelerate
start-up entrepreneurs towards the development and commercialisation of cleantech
solutions to protect our global commons.
This report is a supplement to the 2017 Global Cleantech Innovation Index (GCII). The
GCII aims to measure where clean technology companies are likely to emerge in the
next 10 years and the reasons behind such expectations. Thee method of analysis used
in developing this report follows the spirit of the GCII.
The GCII methodology was extended to include GCIP partner countries that were not
already part of the GCII’s purview, namely Armenia, Malaysia, Morocco, Pakistan,
and Thailand. In order to draw out an accurate assessment of each country’s cleantech
ecosystem, a questionnaire was designed and submitted to experts in each of the 8
countries.
The result of incorporating GCIP countries into the GCII methodology are presented
below in figure 1. In comparison to the forty advanced economies analysed in the GCII
2017 report, the GCIP partner countries are placed in the lower half of the ranking,
with Armenia, Morocco and Pakistan forming the bottom three of the forty-five
countries analysed. It should be noted that for Pakistan, data was not available to
prescribe a score in either of the input to innovation indicator pillars.
18
16
GCII overall score, including GCIP countries
14
12
10
8
6
4
2
0
Finland
Denmark
Sweden
Canada
Israel
Germany
UK
Pakistan
USA
Switzerland
Norway
France
South Korea
Singapore
Ireland
Japan
Netherlands
Austria
China
Belgium
Australia
Slovenia
New Zealand
Hungary
Poland
Spain
Malaysia
Italy
Portugal
Czech Republic
India
Brazil
South Africa
Mexico
Turkey
Thailand
Greece
Romania
Argentina
Bulgaria
Russia
Saudi Arabia
Indonesia
Armenia
Morocco
General Innovation Drivers Cleantech-Specific Innovation Drivers
Evidence of Emerging Cleantech Innovation Evidence of Commercialised Cleantech Innovation
Figure 1 2017 Global Cleantech Innovation Index including GCIP countries
4 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles
Cleantech Group and WWF
The appearance of the eight GCIP partner countries in the lower half of this ranking
serves to highlight the need for improvements across the range of indicators measured
in the GCII. Incubator programs and accelerators, such as the GCIP, are part of the
solution, but in the country profiles that follow, the requirement for further incubation
and coordination of the cleantech ecosystems is highlighted as needing more attention.
Figure 1 also breaks down a country’s score by the 4 indicator pillars used in the GCII
methodology (for more details see Methodology). For instance, Turkey scores well
on General Innovation Drivers, while Malaysia scores well on evidence of cleantech
commercialisation.
Information in Figure 1 above is further analysed to focus on inputs to innovation and
presented in Figure 2 below. Turkey and Thailand score strongly in General
Innovation Drivers, and in Cleantech-Specific Drivers India and South Africa
score strongly.
9
8
GlGCII inputs score, including GCIP countries
7
6
5
4
3
2
1
0
Denmark
Sweden
Canada
Norway
USA
Finland
Switzerland
Israel
UK
Australia
Netherlands
Ireland
Austria
Japan
Germany
China
France
Belgium
South Korea
Hungary
Poland
Singapore
Italy
India
New Zealand
Portugal
Slovenia
Brazil
Turkey
Spain
Thailand
Argentina
South Africa
Czech Republic
Malaysia
Saudi Arabia
Indonesia
Mexico
Bulgaria
Romania
Greece
Russia
Morocco
Armenia
Pakistan
General Innovation Drivers Cleantech-Specific Innovation Drivers
Figure 2 GCII and GCIP countries: Inputs to Innovation
The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 5
Cleantech Group and WWF
Figure 3 zooms in on the outputs of innovation where South Africa and India again
score strongly in Evidence of Emerging Cleantech, and in Evidence of Commercialised
Cleantech Malaysia and Turkey score strongly.
12
GCII outputs score, including GCIP countries
10
8
6
4
2
0
Finland
Sweden
Canada
Denmark
Germany
Israel
UK
USA
Singapore
South Korea
France
Japan
Ireland
Switzerland
Netherlands
Norway
Austria
China
Belgium
Slovenia
Spain
Malaysia
New Zealand
Australia
Czech Republic
Poland
Hungary
Italy
Portugal
Mexico
South Africa
Brazil
Greece
Romania
India
Turkey
Russia
Bulgaria
Pakistan
Thailand
Argentina
Armenia
Morocco
Saudi Arabia
Indonesia
Evidence of Emerging Cleantech Innovation Evidence of Commercialised Cleantech Innovation
Figure 3 GCII and GCIP countries: Outputs of Innovation
6 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles
Cleantech Group and WWF
Overall Observations
1. Malaysia leads the 8 GCIP partner countries, with particular strength in
evidence of Commercialised Cleantech. This is caused by high levels of cleantech
commodity exports and imports, in part due to the biomass pellet industry
which is well established. This strong level of cleantech commercialisation is
built on a foundation of leading levels of public cleantech R&D expenditure and
domestic cleantech investors. However, despite relatively good access to finance
and a promising number of cleantech incubators active in the country, there is
currently very little evidence of Emerging Cleantech. Research and development,
and promotion of cleantech start-ups from public and private sector, need to fill
this gap in the country’s cleantech innovation ecosystem.
2. Pakistan, Armenia and Morocco score below the minimum observed for the 40
global countries, largely due to a lack of significant cleantech innovation outputs
which forms 50% of the score in our methodology. Innovation inputs are nascent,
but growing, but suffer from limited private sector funding support across the
three countries. These countries have nascent cleantech innovation ecosystems.
3. South Africa and India lead the group in showing Emerging Cleantech
innovation, which, given the right support structures and market demand, could
translate into significant Commercialised Cleantech in the near future.
4. Consistent with the main GCII findings, above-average cleantech innovation
outputs require an above-average level of inputs (both General, and Cleantech-
Specific Innovation Drivers)
5. All GCIP countries show some government support for the cleantech sector, but
there is a wide gap between leader and laggard countries. Government support
typically focuses on overarching cleantech-friendly policies. In some instances,
direct financial support is available beyond cleantech R&D expenditure.
Governments tend to focus on promoting renewable energy technologies and
energy-efficiency enhancing technologies.
6. Access to finance for cleantech start-ups varies greatly, and is a major focus
of our assessment throughout. However, accelerators & incubators as well as
government funds and grant schemes play an important role, and tend to be
present in countries showing evidence of Commercialised Cleantech.
7. The deployment of early-stage and late-stage private capital in the cleantech sector
is low compared to a global average. A combination of a risk-averse investment
culture, lack of information sharing, and a low supply of innovative companies
contribute to varying degrees across the countries analysed.
8. Low levels of corporate engagement in the cleantech innovation sphere exist in
all GCIP countries.
Recommendations
Overall, all GCIP countries can benefit from greater coordination between the entities
that provide inputs to innovation. Coordination between government departments
and agencies responsible for managing initiative and policies that promote innovation
is just one level of coordination, but interaction with the private sector deserves much
closer attention. This report often highlights the presence of good public policy that is
not carried into strong private sector support.
The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 7
Cleantech Group and WWF
Inputs to innovation
1. Cleantech-related research activities in universities are often detached from the
private sector. For example, in Malaysia there is a good amount of research being
funded, but this has not translated into early-stage entrepreneurial activity, and
there is low evidence of environmentally-related IP protection. Furthermore,
support programmes are required to match these prototype developments with
business model developments, to carry innovation into commercial success.
2. Armenia’s recent introduction of a course on Entrepreneurship at the American
University of Armenia’s Entrepreneurship & Product Innovation Centre could
serve as an example on how to bridge the commercialisation gap between research
facilities and start-up company origination.
3. All GCIP countries do not have significant numbers of cleantech-related industrial
clusters. Organizations that seek to connect innovators with potential investors
or industrial partners should be increased to facilitate the scale-up of cleantech
start-ups.
4. Each of the countries analysed had an incomplete set of cleantech-friendly policies,
as measured in the GCII indicator. The first recommendation would be to push
towards a full set of supportive policies, which enable a base of legislation on which
cleantech-targeted policies and support schemes can be built. For a summary of
existing cleantech friendly policy, refer to the extended summaries in appendix 2.
Outputs of innovation
1. In countries where some forms of earl-stage support is already present, such as
South Africa, India, Malaysia, it would facilitate growth of output indicators if
these early-stage grant and development funds where directed through public-
private partnerships for incubator/accelerator/cluster models that draw on the
strength of existing industry players within country.
2. For all countries covered in this report, it is important for governments to examine
the role it can play in facilitating the transition from public to private sector
funding. In all countries except India and South Africa, venture capital financing
was either low or zero. In the responses by in-country experts, it is evident that
there are pockets of innovation, but these companies and start-ups are finding it
extremely difficult to attract private investors. Even in South Africa and India,
where there are plenty of examples of early-stage venture capital in cleantech, our
assessment shows that these are often provided with stringent de-risking terms.
As in the example highlighted in Thailand, these terms are often based on asset-
based collateral, which is often a prohibitive term in the cleantech ecosystems
analysed in this report.
8 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles
Cleantech Group and WWF The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 9
Cleantech Group and WWF
CONTENTS
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 5
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . 15
COUNTRY PROFILES . . . . . . . . . . . . . . . . . . . . . . . . 17
Armenia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
APPENDIX – METHODOLOGICAL FRAMEWORK OF THE GCII . . . . . . . . 72
10 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesCleantech Group and WWF INTRODUCTION In today’s economic landscape where resource constraints and climate concerns are no longer externalities, technology innovation has emerged as a key driver for economic growth. Today’s clean technology innovations will fuel the next industrial revolution that will shape tomorrow’s global economy and job market, and start-ups and small and medium-sized enterprises will play a vital role in catalyzing breakthrough technology innovations. And as the world continues to globalize, the synergetic value of collaboration among developing countries and advanced economies are quickly leading to innovation linkages and receiving recognition as a catalyst for game changing solutions at the global scale. Cognisant of these essential factors, the Global Cleantech Innovation Index (GCII) 2017 investigates where, relative to GDP, entrepreneurial clean technology companies are most likely to emerge from over the next 10 years – and why. Drawing on a wide range of factors and sources, the study seeks to answer the questions: which countries currently have the greatest potential to produce entrepreneurial cleantech start-up companies that will commercialise clean technology innovations over the next 10 years? The changing nature of cleantech investment: In the 2014 Global Cleantech Innovation Index Report, we reported on the rise of ‘other cleantech’ sectors gaining favour in a ‘post-bubble landscape for renewables (especially solar), in which many venture capital investors have pulled out since the hype and height of stimulus spending in 2008’.1 According to Figure 1, the update in 2017 would confirm the first assertion that there has been a proliferation of ‘other cleantech’ sectors receiving venture investment in substantial quantities, while sectors such as solar, which constituted a large part of the $329 billion invested in renewable energy in 2015, have used venture capital investment to go mainstream, proving that the solar ‘bubble’ may has in fact led to the maturing of the solar market. The second comment on the decline of venture capital investor’s participation, at the time measured by the decline of investment from the 2011 peak to the 2013 trough, seems to have been written at a turning point. On evidence of the last four years, venture capital is steadily returning to newly-defined cleantech. 1 Cleantech Group, WWF, Global Cleantech Innovation Index, 2014 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 11
Cleantech Group and WWF
Figure 1. Global Venture and Growth Equity Investment in cleantech companies, 2010 - 2016
Billions
10 geothermal
biomass generation
hydro & marine power
8 air
water & wastewater
fuel cells & hydrogen
6 wind
recycling & waste
biofuels & biochemicals
4 smart grid
energy storage
advanced materials
2 agriculture & food
solar
energy efficiency
transportation
2010 2011 2012 2013 2014 2015 2016
Includes seed, Series A, Series B, growth equity, excludes outliers (>$350 million)
Figure 4 Global Venture and Growth Equity Investment in cleantech companies,
2010 - 2016
However, it is returning to a much-changed investment theme. While Renewable
Energy and Energy Efficiency remains the bedrock of cleantech venture capital,
there has been a significant rise in investment in Agriculture and Food, Advanced
Materials, and Transportation, with the latter now a leading cleantech sector. We shall
return to look at the impact of Energy Efficiency and Transportation on the cleantech
investment theme later in this report.
One recent example of the growing strength of cleantech investment was announced
at COP21 in Paris. A new Breakthrough Energy Coalition for early stage cleantech
investment was launched. This new investment group committed to provide patient
capital for clean energy innovation, starting with a $2 billion pledge that is expected
to reach $20 billion by 2025. To follow this announcement, in December 2016
Breakthrough Energy Ventures was launched with $1 billion, with the remaining 50%
expected to be announced soon. This represents a welcome 12% addition to the $8
billion in global venture and growth equity investment in cleantech companies.
Key results from the GCII report
The GCII 2017 analyzed 15 indicators of creation, commercialisation and growth
of cleantech start-ups in 40 countries. The key trends identified in top performing
countries are that they are
a) addressing growing demand for renewable energy and other clean technologies;
b) connecting start-ups with multiple support channels to increase their success
rates and;
c) increasing international engagement across the cleantech ecosystem.
As expected, and consistent with the 2014 Index, there is a positive correlation
between inputs to innovation and outputs of innovation. Countries that are facilitating
investment in innovation, either through public R&D, cleantech-friendly policy, or any
other of the inputs measured, tend to also reap benefits from the commercialisation
of cleantech companies.
The top three positions in the GCII 2017 are held by Denmark, Finland and Sweden.
Denmark tops the 2017 Index, moving up from 5th place in 2014, based on strong
scores in both inputs to innovation and outputs of innovation. The key contributing
12 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesCleantech Group and WWF
cleantech specific drivers include the amount of capital raised by cleantech funds
and the number of cleantech organizations. Denmark also shows strong evidence
of Commercialised Cleantech, including cleantech exports, the number of public
cleantech companies and the number of renewable energy jobs. Poland has displayed
the biggest change from the 2014 Index, as it rose thirteen places to take 24th place.
This is mainly due to three notable increases in Cleantech-Specific Drivers. Poland’s
public cleantech R&D expenditure now sits at the global average, having been in last
place in the 2014 Index. The country also improved its score in the Renewable Energy
Country Attractiveness Index, moving from 29th to 27th in that Index. These factors
are combining to show increasing evidence for Emerging Cleantech innovation, as
Armenia
Poland moved up 16 places in our measurement of cleantech patent filings.
The Global Cleantech Innovation Programme (GCIP)
The Sustainable Development Goals and the Paris Agreement are the world’s
commitment to safeguarding the global commons. The United Nations Industrial
Development Organization (UNIDO), with its unique mandate to support inclusive
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and sustainable industrial development, has partnered with the Global Environment NV T
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Facility (GEF) to address the most pressing global environmental challenges of our
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time. Through fostering innovation and entrepreneurship ecosystems, UNIDO and
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to leapfrog to cleaner, more resilient economies.
Innovation Ecosystem
The GCIP promotes an innovation and entrepreneur ecosystem by identifying and
nurturing cleantech innovators and entrepreneurs; by building capacity within national
institutions and partner organizations for the sustainable implementation of the cleantech
ecosystem and accelerator approach; and by supporting and working with national policy
makers to strengthen the supportive policy framework for SMEs and entrepreneurs.
GEF.org
Entrepreneurship and innovation acceleration programmes can act as strong catalysts
in creating and strengthening innovation ecosystems, as evidenced in the GCIP partner
countries. The acceleration programmes are especially instrumental in carrying the
inputs of innovation to result in cleantech-specific outputs of innovation, if emphasis
on commercialisation and investment mobilization is adequately addressed.
Through this cleantech ecosystem and accelerator approach, the GCIP catalyzes
investment to support and accelerate start-up entrepreneurs towards the development
and commercialisation of their innovative ideas.
Innovation and Entrepreneurship Policy Frameworks
An integral part of GCIP is the development of an enabling environment for cleantech
innovation and entrepreneurship, and GCIP employs a cross-sectoral and multi-
tiered approach with a view to building a sustainable “ecosystem” for innovative
entrepreneurship in small businesses. This entails supporting national partners to
strengthen the institutional capacities of government agencies focused on small and
medium-sized enterprises (SMEs) development, clean technology and innovation.
Through review of existing policies, regulations and guidelines relating to the
promotion of clean technologies, innovation and entrepreneurship, GCIP also
advises governments to focus on high-impact areas, especially from the perspective
of encouraging and supporting increased engagement and participation of SMEs.
Awareness raising and capacity building activities are also supported through regional
stakeholder meetings and developing partnerships with leading institutions, agencies
and universities.
The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 13Cleantech Group and WWF
Building on the experience accumulated in the past 7 years of supporting over 600
cleantech start-ups and SMEs, GCIP is planning to expand its geographical coverage,
as well as impact across multiple environmental and social areas. GCIP is planning
a transition to an impact-focused accelerator in order to leverage innovation and
entrepreneurship to provide solutions to protect our global commons. Existing
technology categories will evolve in to impact categories Further categories will be
added in future Accelerator cycles to accelerate transformative clean technology
solutions and integrated approaches for energy systems, sustainable cities, healthy
oceans and sustainable fisheries, food systems, and landscape restoration.
GCIP also supports identification and development of demand-driven solutions
that can address the most pressing environmental challenges at the national levels.
Through National Innovation Challenges, innovators are invited to propose technology
innovations that can address a particular problem with high-impact potential. This
approach allows direct market access for the technologies, and ensuring efficiency and
effectiveness in impact scaling.
14 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesCleantech Group and WWF METHODOLOGY The Global Cleantech Innovation Index 2017 Under the policy component of the GCIP to enhance the enabling environment in partner countries, the GCII-GCIP report aims to further strengthen the ecosystem an enabling environment through national policies that promote innovation in clean technologies, and to serve as a valuable policy tool to stimulate a broader economic action plan including strategic support for cleantech solution providers. The aim of this report is to review the existing environments related to the promotion of clean energy/cleantech innovation and support for entrepreneurial efforts in the 8 countries covered by the GCIP programme. In order to achieve this, the country analyses draw on two main sources of information. 1. The first is the 2017 Global Cleantech Innovation Index (GCII). The GCII was first created in 2012 to investigate this question: ‘Which countries currently have the greatest potential to produce entrepreneurial cleantech start-up companies and which will commercialize clean technology innovations over the next 10 years?’. South Africa, Turkey and India are featured in the GCII. The other countries were included in the indexing methodology for the purpose of this report only, illuminating their relative positioning in the global index, while accounting for the missing data-points in the required index indicator input. 2. The second is a customised questionnaire that was submitted to UNIDO in-country PMU’s2. The questionnaire, including a quantitative and qualitative part, strongly follows the structural framework of the main GCII methodology but extends this to illuminate the particularities of the 8 national cleantech innovation ecosystems. A short GCII methodology The overall score for each country is based on the average between inputs to innovation, and outputs of innovation. By definition, inputs correspond to the creation of innovation (the development of technology supply) and outputs relate to the country’s ability to commercialise innovation. This analysis enables to capture the entire national cleantech innovation pipeline. Each of these inputs and outputs are determined by four equally weighted sets of indicators. The four pillars are built from a total of 15 indicators, drawn from both third-party research, public databases and Cleantech Group’s proprietary data3. The raw data for each indicator was normalised using a max-min scaling method to allow for comparisons on a common scale. Outliers were identified as those data points outside the upper and lower bounds, and then were attributed the value of the upper bound pre-normalisation of the data set. Where relevant, indicators were analysed from a ‘per GDP purchase power parity’ basis to account for relative accomplishment by size of economy, with the exception of renewable energy consumption (which we calculated as a percent of countries’ primary energy consumption) and employment (which is measured on a per total labour force basis). The scope of the GCII main report study covered 40 countries, including all of the G20. In order to maintain comparability with the 2014 GCII, this report will not expand this selection in the 2017 Index. However, two additions have been made to the Global Cleantech Innovation Index programme. Firstly, a supplemental study of a number of Asian countries was conducted. In this report, data availability restricted a complete indexing of all of the Asian countries targeted, but their general position was 2 Project Management Unit 3 See Appendix 1: Methodological framework of the GCII The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 15
Cleantech Group and WWF
Inputs to Outputs of
Innovation Innovation
determined relative to Asian countries that already appear in the GCII (Japan, India,
Singapore, South Korea, and China). Secondly, using the GCII methodology as a guide,
a cleantech innovation ecosystems assessment was conducted for partner countries of
UNIDO’s Global Cleantech Innovation Programme (GCIP), which includes Armenia,
B: Cleantech- C: Evidence
India, Malaysia, Morocco, Pakistan, SouthD:Africa,
Evidence of and Turkey. The current
Thailand,
Specific of Emerging
Once again, data Commercialised
restrictions and comparability prevented five of these countries
Innovation being added toCleantech Cleantech
the main GCII, however for certain dimensions of the ecosystem in-
Drivers were possible for many of theInnovation
depth analysesInnovation countries, which will be captured in the
supplement report. For the first time we are also launching a micro-site for the Index
where you can click through country profiles and other data, see www.i3connect.com/
gcii for more information.
vation • Government policies The GCIP countryprivate
• Early-stage analysis methodology
• Cleantech Imports
were analysed for; Generaland
investment
• Public R&D spending The countries Exports Drivers, Cleantech-Specific
Innovation
ial Innovation• Drivers, evidence of Emerging
High impact Cleantech Innovation, and evidence of
• Renewable
• Access to Commercialised Cleantech Innovation – which correspond to the four pillars of the
private finance companies energy consumption
GCII methodology.4
• Infrastructure • Environmental • Late-stage
The Global context: South Africa, Turkey and India feature in the GCII, and their
for renewables patents investment and exits
performances can therefore easily be put in a global perspective. Thailand, Pakistan,
• Cleantech industry Malaysia, Armenia, and Morocco do not•featureListedincleantech
the GCII, but for the purpose of
this study only, the index methodology wascompanies
applied to these countries too, having to
organsiations
account for their limited data availability by a weighting method. The questionnaire
• Employees
responses allowed to fill some data gaps with additional information. Based on these
new cleantech innovation index scores, each country profile features a country peer
grouping and a radar graph displaying its performance compared to a global average.
Figure 5 can be used to interpret each country’s performance.
How to read the
, World Intellectual Property Organisation General Innovation Drivers
ndex, 2016 country profiles • General innovation inputs
esearch Association (GERA), • Entrepreneurial culture
onitor, 2016
2015
Progress, 2015
Commercialised Cleantech-specific
iture on R&D 2013-14 Cleantech Innovation Innovation Drivers
Global Status Report • Cleantech Imports and Exports • Government policies
• Renewable energy consumption • Public R&D spending
ds of Carbon Pricing, 2016 • Late-stage investment and exits • Access to private finance
rophies, Green Bonds, Policy Perspective, 2015 • Listed cleantech companies • Infrastructure for renewables
Energy Country Attractiveness Index, 2016 • Employees • Cleantech industry organsiations
eantech 100, 2014 - 2016
Treaty database, 2013
rt data, 2014-2016 Emerging Cleantech Innovation
orld Energy, 2016 • Early-stage private investment
• High impact companies
and Jobs Annual Review, 2016
• Environmental patents
dour and WilderHill indices of publicly traded
Capital Investment, i3 data, 2014 - 2016
6 Figure 5 How to read a country profile radar chart
The country-specific cleantech innovation ecosystem: In the framework of
the GCII, the two types of data inputs (1. and 2. above) informed a detailed assessment
eantech Innovation Index 2017 of a country’s key cleantech-innovation supporting mechanisms/policies, start-up
access to finance, and its General Innovation Drivers, Cleantech-Specific Innovation
Drivers, evidence of Emerging Cleantech Innovation, and evidence of Commercialised
Cleantech Innovation. The findings of this analysis are firstly presented in a short
country summary, followed by an extended country profile.
4 See Appendix 1: Methodological framework of the GCII
16 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesCleantech Group and WWF
COUNTRY
PROFILES
ARMENIA
INDIA
MAL AYSIA
MOROCCO
PAKISTAN
SOUTH AFRICA
THAIL AND
TURKEY
The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 17Cleantech Group and WWF
ARMENIA
ARMENIA
While Armenia shows some evidence of a supportive cleantech policy environment,
with a solar-to-grid enabling law and different renewable energy tariffs, the cleantech
innovation sphere remains nascent. With the current government focus on building a
strong IT start-up sphere, cleantech start-ups could thrive alongside.
Armenia General Cleantech-
Innovation Average General specific
Drivers Armenia Ranked in Innovation Innovation Emerging Commercialised
GCII Drivers Drivers Innovation Innovation
+1 Mexico (35th) Russia (39th) Romania (32nd) Indonesia (39th)
Commer- Cleantech
cialised Specific Armenia Armenia Armenia Armenia Armenia
Cleantech Innovation
Innovation Drivers
-1 Romania (36th) Saudi Arabia (40th) Portugal (33rd) Saudi Arabia (40th)
Figure 7 Armenia’s relative positioning in the GCII ranking based on
Emerging
Cleantech its performance in GCII indicator pillars
Innovation
Figure 6 Armenia’s Strengths Weaknesses
performance in the Early-stage entrepreneurial activity: 1.5 new INSEAD Global Innovation Index (60/128)5
businesses per 1000 working age population/annum
indicator pillars,
compared global average 9th in WB’s global assessment for the Ease of Ranked 113 out of 176 in the Corruption Perception
‘Starting a Business’ Index6
Tax privileges to start-ups in the IT-sphere, can apply Few cleantech-supportive government policies (2/8
to software-focused cleantech measured in GCII)
Government-backed innovation accelerators and Access to private finance for start-ups is limited; lack
incubators with seed-stage finance availability; of centralised network and risk-adverse investment
Government fund (SME DNC) for soft-loan provision culture
Good R&D expenditure in the university research Start-ups fail to show commercial success due to a
sector lack of domestic market demand
Figure 8 Armenia’s strengths and weaknesses in key indicators
Key Support Mechanisms/Policies
The Armenian cleantech ecosystem is nascent due to low cleantech-specific policy and
support in Armenia. Cleantech start-ups can thrive with further improvements made
in the support of the general national innovation ecosystem.
The Armenia ‘SME Development National Centre’ provides soft-loans to
entrepreneurs. Several start-up accelerator & incubator programmes provide
mentoring, training courses, networking as well as small seed funding opportunities
for prototype/product development. Many of these were established by the Armenian
Enterprise Incubation Foundat ion (EIF), including vital technology centres
connecting university research to the market, but other independent accelerators/
incubators also play a role. Few accelerators & incubators, however, run through
universities. Private accelerators, such as the Microsoft Innovation Center, have
an IT focus and, among other roles, help start-ups connect with corporates in the
field. To address the gap between research and market deployment of innovation, the
American University of Armenia’s Entrepreneurship & Product Innovation
Centre has recently opened to provide advanced courses in entrepreneurship, which
is still only limited to students at the university. With the IT sector being the current
focus of public support, the Armenian government recently passed a law giving tax
5 INSEAD, Cornell University, World Intellectual Property Organisation (WIPO), Global Innovation Index, 2016
6 Transparency International, Corruption Perception Index, 2016
18 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesCleantech Group and WWF
ARMENIA
privileges to start-ups in the IT-sphere. As more cleantech start-ups move away from
the traditional hardware focused model to the provision of software that enhances
resource efficiencies, cleantech start-ups can benefit from this policy change too.
Access to Finance
• The Armenian governments has a few funds targeted
at the start-up sphere but the total available capital is
small, and preference is given to the IT sector Commercial Banks
• Incubators and accelerators provide matching grants Venture Capital
FI N AN ACE PRO VI DER
and seed grants Incubators/
Accelerators
• There is no established angel network present, nor
a centralised platform to connect investors and Angels
investment-seeking start-ups
Family & Friends
• Commercial banks are risk adverse in lending to start-
Government Funds
ups, and the VC market is underdeveloped with only 1
IDEATION EARLY-STAGE ACCELERATION GROWTH LATE-STAGE
active firm, and 2 launching in 2017
• Loans to SMEs are provided by banks through the SME DNC programme
Pillar Analysis
Inputs
General Innovation Drivers Cleantech-Specific Drivers
Armenia scores just above neighbouring Georgia in the GCII, outshining Armenia only has a few government policies in place that favour the
it in the level of entrepreneurial activity. Entrepreneurs are generally cleantech industry, scoring 1/8 of selected cleantech-supportive policies.
well-respected, pointing to a strong intrinsic entrepreneurial culture There is no renewable energy mandate, highlighting the lack of solid
within Armenian society. New entrepreneurs benefit from the one- commitment to GHG emission reduction. However, the Armenian
stop shop principle which is applied to setting up a new company in parliament passed a law allowing households that generate PV electricity
Armenia. The principle is proving to be effective, as the World Bank to sell to the grid and, in cooperation with Armenian commercial banks,
assigns the country the 9th rank in a global assessment for the Ease the EBRD’s Energocredit programme has started providing companies
of ‘Starting a Business’. The lack of education in entrepreneurship has with loans and a 10-15% cashback provision when investing in energy
recently been addressed by the opening of American University of efficient equipment or construction.
Armenia’s Entrepreneurship & Product Innovation Centre. However, Armenia’s estimated public cleantech R&D expenditure comes close to
there is a general lack of publicly available and centralised information the median of Asian countries, but well below the Global average. R&D
about both investors and start-ups within the country, limiting the expenditure is mainly funnelled into academic research, which to-date still
growth of the entrepreneurial ecosystem. Some public accelerators lacks connection to the real market via technology transfer and spin-out
and incubators exist, and private ones with an IT-focus can involve the offices.
participation of corporates, e.g. in the Microsoft Innovation Center.
Most public policy and investment support remains limited to the IT start-
up sphere.
Outputs
Emerging Cleantech Commercialised Cleantech
Armenia has a high number of environmental patents, relative by GDP. Armenia does not show signs of cleantech innovation commercialisation
This can be attributed to the significant university research funding and ranks lowest among all countries analysed in this indicator pillar.
that currently exists in cleantech-related fields. However, the lack of The only present clean technology are large-scale installed hydropower
domestic market demand (related to low cleantech-supportive policy stations that use foreign technology and are often managed by
environment) and limited access to finance reduces the chances of multinational companies.
successful commercialisation. Overall, inputs to cleantech innovation in None of the Armenian Emerging Cleantech start-ups received outside
Armenia at present do not provide the setting for successful founding funding and are still struggling to gain commercial traction. Some of the
of cleantech startups without the support of programmes such as cleantech start-ups already have developed market-ready products and
GCIP, which can point to several examples of startups active in diverse are on track to commercialize or license it to other companies. Those
fields of cleantech. For example, Black Solar focuses on developing who have started production require more investment to expand a
high efficiency and low-cost silicon solar cells by using nanostructured market outside the limits of Armenia, where the demand is higher and
“black silicon”. In waste-to-energy, Am-Eska has found a way to convert competitiveness can be tested.
used tires to diesel fuel through an emission-light refining process.
The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 19Cleantech Group and WWF
Extended Summary
Inputs to cleantech innovation
General Innovation Drivers
Armenia scores just above neighbouring Georgia in the GCII, outshining it especially
in the level of entrepreneurial activity 7. Armenia’s entrepreneurial culture is built
largely on the very strong maths and science foundation established during the
Soviet era. Entrepreneurs are generally well-respected, pointing to a strong intrinsic
entrepreneurial culture within Armenian society. However, Armenia has high levels of
endemic corruption (the country is ranked 113 out of 176 in the corruption perceptions
index)8, which may act to hinder the creation of a fair playing field in the innovation
sphere.
New entrepreneurs benefit from the one-stop shop principle which is applied to setting
up a new company in Armenia. The principle is proving to be effective, as the World
Bank assigns the country the 9th rank in a global assessment for the Ease of ‘Starting
a Business’ 9. The registration for a new business is immediate when made online, and
only takes up to 2 working days in other cases.
The lack of education in entrepreneurship has recently been addressed by the
opening of American University of Armenia’s Entrepreneurship & Product Innovation
Centre. However, there is a general lack of publicly available information about both
investors and start-ups within the country, limiting the growth of the entrepreneurial
ecosystem. Foreign investors benefit from several tax incentives and administrative
exemptions, although these incentives related primarily to physical investment and
thus will not necessarily act to incentivise foreign start-up investments. No further
direct policy incentives exist facilitating domestic investor interest in local start-ups.
Cleantech-Specific Innovation Drivers
Cleantech-friendly policy environment
Policy Area
Carbon tax/carbon market
Clean energy tax incentives; Tax incentives specifically for clean
technology companies
Green bonds; government-backed or -owned green investment
banks; green investment funds.
Government investment/loans/grants for climate-friendly and
eco-friendly technology
Transport obligation; Transportation efficiency or emissions
standards
Renewable energy standard and/or feed-in tariffs; Electric utility
quota obligation
Government tendering/ green procurement
Research institutes or government support university programs
for clean technologies
Armenia has some way to go before you could describe its policy environment as
supportive of cleantech. There are renewable energy tariffs, which make a distinction
7 World Bank, Fostering Entrepreneurship in Armenia, 2013, http://documents.worldbank.org/curated/
en/462221468008429321/Fostering-entrepreneurship-in-Armenia
8 https://www.transparency.org/country/ARM
9 http://www.doingbusiness.org/data/exploreeconomies/armenia
20 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesCleantech Group and WWF between different forms of renewable energy and are updated on an annual basis. Interestingly there is to-date no renewable energy mandate, highlighting the lack of solid commitment to GHG emission reduction. The country has vehicle emission standards which are in line with the UNECE requirements. Additionally, the Armenian parliament passed a law allowing households who generate PV electricity to sell their electricity to the grid. The Armenian government recently passed a law giving tax privileges to start-ups in the IT-sphere. As more cleantech start-ups move away from the traditional hardware focused model to the provision of software that enhances resource efficiencies, cleantech start-ups can benefit from this policy change too. In cooperation with Armenian commercial banks, the EBRD’s Energocredit programme has started providing companies with loans and a 10-15% cashback provision when investing in energy efficient equipment or construction, incentivising domestic demand for cleantech. However, these policies remain limited in their scope and the Armenian government thus fails to provide direct incentivising policies for the cleantech innovation system. R&D and accelerator/incubator support Armenia’s estimated public cleantech R&D expenditure comes close to the median of Asian countries, however it is mainly funnelled into the academic research sphere. Government funded research projects within universities cover several cleantech- related fields. (While there are some university spin-offs, in-country experts point to the relative disconnect between the government-funded cleantech academic research and the market.) Several start-up accelerator & incubator programmes provide mentoring, training courses, networking as well as small seed funding opportunities for prototype/product development. Many of these were established by the Armenian Enterprise Incubation Foundation (EIF), including vital technology centres connecting university research to the market, but other independent accelerators/incubators also play a role. Few accelerators & incubators, however, run through universities. Private accelerators, such as the Microsoft Innovation Center, have an IT focus and, among other roles, help start-ups connect with corporates in the field. Supported by the World Bank, newly built technology centres act as clusters and separate start-up accelerators in the t wo major cities of Armenia. The Armenia Renewable Energy and Energy Efficiency Fund is an independent NGO that promotes the use of sustainable energy in Armenia. Access to finance for cleantech start-ups Private sources of capital 1. Family & friends: Very little due to the risk-adverse investment culture and lack of investor education on the start-up sphere. 2. Angel networks: Angel investment in Armenia is not centralised and makes up a small proportion of available capital for start-ups. In-country experts see that a central platform with investor training and education could greatly enhance the capital available to start-ups from this source. 3. Private accelerators and incubators are scarce in Armenia. The only active examples is the Microsoft Innovation Centre, which also partly supported by public organisations of Armenia and USAID. 4. Venture capital investment in Armenia is underdeveloped. Granatus Ventures is the only venture capital firm in Armenia, but it tends to focus on IT development, with total funds valued at $5 million (USD). The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 21
Cleantech Group and WWF
5. The private sector interest in Armenian cleantech is still low, and no evidence of
corporate venturing exists.
6. Commercial Banks are risk-averse and tend not to grant loans without sufficient
collateral, which is hard for cleantech start-ups to obtain.
Public sources of capital
1. There is good evidence of public accelerators and incubators that provide support
as well as access to early-stage finance for Armenian start-ups, mostly in the
$1,000 to $15,000 (USD) range. The European Investment Fund holds start-up
competitions through an accelerator with grant provisions of up to $50,000 USD.
2. The Armenian government, and international donor-backed “Small and Medium
Entrepreneurship Development National Center” (SME DNC) Fund provides low-
interest rate loans (max. 10,000 USD). Armenian Development Agency sources
foreign funds for SME financing in Armenia, does not provide own access to
finance.
The financing environment in Armenia is underdeveloped and presents a major
limitation to successful entrepreneurship. There is not enough seed-stage risk capital
available in the country in order to bring emerging research to the market.
Outputs of cleantech innovation
Emerging cleantech innovation
In renewable energy, for Armenia has a high number of environmental patents, relative by GDP. This can be
example, Black Solar focuses
attributed to the significant university research funding that currently exists in
on developing high efficiency
and low-cost silicon solar cells cleantech-related fields. However, the lack of domestic market demand (related to low
by using nanostructured “black cleantech-supportive policy environment) and limited access to finance reduces the
silicon”. chances of successful commercialisation. Overall, inputs to cleantech innovation in
In waste-to-energy, Am-Eska Armenia at present do not provide the setting for successful founding of cleantech
has found a way to convert used
tires to diesel fuel through an start-ups without the support of programmes such as GCIP, which can point to several
emission-light refining process. examples of start-ups active in diverse fields of cleantech.
In advanced materials, NanoHi
has developed a process for the None of these examples received outside funding and are still struggling to gain
energy-efficient production of commercial traction. Some of the cleantech start-ups already have developed market-
two-dimensional materials like ready products and are on track to commercialize or license it to other companies.
graphene.
Those who have started production require more investment to expand a market
outside the limits of Armenia, where the demand is higher and competitiveness can
be tested.
22 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesGLOBAL WARMING IMAGES / WWF
Cleantech Group and WWF
The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation Profiles 23Cleantech Group and WWF
INDIA
INDIA
India experienced a drop in its position in the Global Cleantech Innovation Index in
2017, dropping from 21st in 2014 to 29th position. While there is some evidence for this
being due to a methodological change in the GCII, the new position also reflects some
areas for improvement, especially in joining up the great diversity of entrepreneurship,
support schemes, financing markets, and established industrial expertise. Combining
our GCII findings with questionnaire results, and further conversations with in-
country experts, we find the potential scale and pace of innovation in India is
substantial.
India General General
Innovation Average Ranked Innovation Cleantech- Emerging Commercialised
Drivers India In GCII Drivers specific Drivers Innovation Innovation
+1 Argentina (32nd) Poland (21st) Poland (24th) Argentina (36th)
Commer- Cleantech India (33rd) India (22nd) India (25th) India (37th)
cialised Specific
Cleantech Innovation
Innovation Drivers -1 Indonesia (34th) South Korea (23rd) Hungary (26th) Russia (38th)
Figure 10 India’s relative positioning in the GCII ranking based on its
Emerging performance in GCII indicator pillars
Cleantech
Innovation
Figure 9 India’s Relative Strengths Relative Weaknesses
performance in the Low access to seed (and pre-seed) entrepreneurship
indicator pillars, Strong culture of entrepreneurship
support beyond friends and family network
compared global average
High barriers to entry in government-backed support
Strong government entrepreneur support schemes
schemes
Strong cleantech-specific government initiatives in Lack of coordination between government-backed
support of startups entrepreneur schemes at both state and federal level
Strong government support of a clean energy sector,
Cleantech-friendly government policy agenda, with
but not as strong support for innovation in other clean
ambitious GHG emission targets and standards
technology sectors
Attractive destination for clean energy infrastructure
Risk averse growth capital investment market
investment
Several innovation clusters and accelerators provide Start-ups fail to show commercial success due to a
small loans and grants for start-ups lack of domestic market demand
Figure 11 India’s strengths and weaknesses in key indicators
Key Support Mechanisms/Policies
While India has only few a few policies focused on cleantech, there is a wealth of
policies and initiatives aimed at promoting the development of start-ups. One example
is Startup India, a program that will additionally introduce a tax exemption to start-
ups for 3 years to provide additional incentives to entrepreneurs. The Department
of Science and Technology (DST) has set up more than 100 Technology Business
Incubators (TBI) and Science & Technology Entrepreneurs Parks (STEPs),
providing direct support structures to more than 2000 start-ups at one time.
Industrial energy efficiency is approached via a sophisticated ‘Perform, Achieve
and Trade’ (PAT) scheme, designed as a market-based mechanism to enhance
efficiency in energy intensive industries and facilities via capping and trading on
energy savings. The promotion of energy efficiency is further supported by policy
incentives on green buildings (e.g. IGBC/GRIHA ratings), the agricultural sector and
the promotion of demand-side management in utilities.
24 The Global Cleantech Innovation Index 2017 – Global Cleantech Innovation Programme (GCIP) Country Innovation ProfilesYou can also read
